Date of Award


Degree Name

Doctor of Philosophy


Public Affairs and Administration

First Advisor

Dr. Peter Kobrak


The American system of welfare for families with children is a partnership between the federal and state governments. Under this partnership, the federal government establishes the basic eligibility policies for the Aid to Families with Dependent Children (AFDC) program, the principal program providing cash assistance to poor families. States determine payment levels and administrative policies. Costs are shared through a formula reflecting each state’s ability to pay.

To encourage policy experimentation by the states, a section of the act creating the AFDC program allows the Secretary of the Department of Health and Human Services to waive some provisions. This became a critical welfare reform tool in 1987. The Secretary attaches certain conditions to waivers, including one limiting federal expenditures to the level expected without the demonstration policies. This condition is called “cost neutrality.” Demonstration waivers, and, in particular, the role of cost neutrality, are the subject of this dissertation.

Waivers are found to provide the basis for an unstable compromise between the federal government’s desire for a uniform national AFDC program and the states’ Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. desires for maximum local flexibility. Despite intense efforts over the last two years to find agreement on more fundamental changes, reforming welfare one state at a time through waivers remains the national policy, supported grudgingly by Democrats and Republicans at both the state and federal levels.

Cost neutrality is found to be a novel and significant aspect of federalism. It protects federal financial interests while encouraging considerable state policy ingenuity, but it inhibits states from carrying out certain demonstrations. Results may provide an early indication of a project’s success or failure. Early results from Michigan became part of the national welfare reform debate in 1994.

The methodology adopted for computation of savings or excess costs from waiver demonstration projects, as applied to preliminary results from Michigan’s To Strengthen Michigan Families demonstration, is reviewed. Resampling was utilized to estimate the statistical variation in Michigan’s reported savings, showing a high level of uncertainty in the results. Implications for the political and practical uses of such results are discussed.

Access Setting

Dissertation-Open Access